Government publishes review into sickness absence

Sickness absence systems push people away from work and provide little support for them to return to work quickly, according to an independent review aimed at reducing the cost of sickness to employers, taxpayers and the economy.

The Sickness absence review was presented to the government by Dame Carol Black, national director for Health at Work, and David Frost, former director general of the British Chambers of Commerce, on 21 November.

In February 2011, the government called for a major review of the sickness absence system in the UK in order to combat the 140 million days lost to sickness absence every year.

The review makes a number of recommendations, including:

A new independent assessment service (IAS) that employers and GPs can refer long-term sickness absence cases to for bespoke advice. Employers stand to gain around £100 million a year from reductions to sick pay bills from using this service.

A new job brokering service for employees on long-term sickness absence who are unable to return to their current employer. This service could save the state up to £300 million a year by reducing the benefits bill.

The removal of the assessment phase for claimants of employment and support allowance. This will allow those claimants that are in need of support to get it soon and those that can work find a job more quickly. It will also save the taxpayer £100 million each year.

The government will undertake a comprehensive assessment of the review’s findings and recommendations, with the view to publishing a response during 2012.

Dame Carol Black, national director for Health and Work, said: “Sickness absence from work can be unavoidable, but when unduly prolonged it is wasteful and damaging.†

“We believe we have presented an urgent and compelling case to change the current system so that it unashamedly promotes work for those that can.

“If implemented, these recommendations will ensure many more people with health conditions are able to enjoy the benefit of work; far fewer will needlessly lose work and fall into long-term benefit dependency.”

David Frost, former director general at the British Chamber of Commerce, said: “Evidence clearly shows that the longer you are out of work the harder it becomes to get back in. But in many cases sickness absence is due to health conditions that are nonetheless compatible with work, and can often be improved by work.

“The current certification system does not provide employers with the advice they need to make informed decisions about their employees’ capability for work.

“The establishment of the independent assessment service will provide practical support and help to allow employers to make informed judgements about a return to work for their staff.”

Lord Freud, the minister for Welfare Reform, added: “The government is committed to supporting more people with health conditions to work.

“The economy loses £15 billion in lost economic output each year due to sickness absence and we cannot continue to foot this bill.

“But even more important is the impact of needless inactivity on people’s lives; the damage to their aspirations and their health and the damage to their families and communities.”

Diane Buckley, managing director at Legal and General21st November 2011 at 3:58 pm

Employers often tell us that they need more support to help their staff when they can’t work because of illness and today’s review shows that the government is taking these issues seriously.

It shows how important it is for responsible employers to intervene early to help their staff if they become ill. Our experience with workforces up and down the country has shown time and again that prevention is better than cure.

The government has also today said that it sees a clear role for experts to deliver early intervention support in the workplace.

The review clearly recognises that group income protection providers could play a key role in cutting workplace sickness and absence and delivering better quality support for employees.

We welcome the report’s findings, especially the recommendations to support tax relief for employers providing interventions such as vocational rehabilitation.

The group risk industry pioneered vocational rehabilitation in the UK, and group risk providers know that early intervention is essential. They have long advocated that in order to achieve a successful return to work, the most crucial period for effective intervention and rehabilitation is 4 to 6 weeks after first absence – especially for mental (stress-related) conditions and musculoskeletal injuries.

Early intervention is one key reason why the group risk industry is more successful than the state in managing return to work. An employer with a group income protection policy is currently able to assess an employee’s level of incapacity and to commence a return-to-work programme long before any assessment for state support is even due to commence.

On top of this, a group income protection scheme provides a continuing income for employees if illness or injury prevents them from working for a prolonged period of time, and the industry paid out £292.3 million to a total of 13,500 families during 2010, thus saving the state considerable burden.

Bringing state and private systems of support into line makes ultimate sense, and would better enable potential incentive programmes for ‘nudging’ employers to make more adequate provision for their workforce.

Employee assistance programmes (EAPs) are extremely effective when it comes to supporting employee attendance and thereby contribute positively to reducing absence in the workplace. They are important strategic interventions that have a specific workplace focus.

By concentrating on early intervention and enabling employees to resolve day-
to-day issues that can affect their productivity and performance at work, EAPs are vital to the health of organisations and their employees.

Over 10 million employees in the UK have access to EAP services and this report rightly acknowledges that EAPs have expanded in recent years and are now commonly offered by organisations. Given their reach and impact, taxing EAPs would be a significant disincentive for employers to offer this type of support and service and would certainly have a negative impact on the health and wellbeing of the workforce.

As an association we welcome the findings of this review and its recommendations that
existing tax relief of EAPs be retained. We look forward to confirmation from government that they will be accepted

James Freeston, sales and marketing director, Axa PPP21st November 2011 at 5:28 pm

Our initial impressions are positive and the authors’ recommendations, if taken forward, should encourage and enable employers to play a bigger role in managing employees’ health and wellbeing.

As a provider of employee health and wellbeing support services, naturally we welcome their proposals for tax relief for targeted employer-funded vocational rehabilitation of ill or injured basic-rate-taxpayer employees. Indeed, we currently offer vocational rehabilitation cover akin to that described in the review (i.e. cover to help ill or injured employees back to health – and back to work) and would welcome further support from government to encourage its uptake.

We further support the authors’ recommendation that employer-funded psychological support services (counselling) to help employees to deal more effectively with the pressures in their lives should not be taxed as a benefit in kind.

We will be considering the report’s findings carefully to see whether they may offer additional opportunities to enable providers such as ourselves to play a bigger role in safeguarding and improving the health of the working age population.

We fully welcome Dame Carol Black and David Frost’s review, for shining a light on the fundamental problems caused by workplace sickness and absenteeism in the UK.

However, while there are many positive points to take away, the recommendations set out in the review raise a number of questions that I’m sure will inspire further debate over the coming weeks.

While the introduction of an independent assessment service (IAS) to manage cases of long-term sickness absence is likely to divide opinion, I would argue that producing a standard of consistency across the board is fundamentally positive. Successful management is all about early intervention and appropriate response, but under the current system, overstretched and insufficiently trained GPs are often forced to make arbitrary judgements with little opportunity to effectively manage the individual back into gainful employment.

Getting people back into work or altering their circumstances both to improve quality of life and also their ability to perform effectively in the workplace is crucial, however people are all too often signed-off or conversely, simply sent back to work, when alternatives might be available. A bespoke service would help to address this, but questions loom large over where these ‘assessors’ will come from and who will pay for it. It would take a huge number of individuals to manage all the necessary cases, given the report’s figures on the number of people currently leaving work through sickness and claiming health benefits each year.

A key takeout from the report is the recommendation to match employees onto more appropriate roles within the organisation wherever possible, rather than the default option of removing them from the workplace and onto benefits. Our experience suggests that the cost of this to employers is relatively low in comparison to the cost of long-term sickness absence, and it is a better option for all involved, including the employee and their families.

Ultimately, I hope the report sparks debate and enables a deeper understanding of the true costs of workplace sickness and absenteeism. The public sector is rightly identified as a key problem area for costly long-term sickness schemes. A key factor in effective absence management is quality line management and there are good examples of this in the private sector.

While this is driven by profitability to some extent, the implications go beyond the bottom line. The impact should not be counted simply in number of days lost, because sickness absence has a far-reaching effect on all organisations, whether it is the morale and productivity of remaining employees or damage to reputation resulting from a reduction in the level of service you are able to offer.